Free of sanctions, Iran orders ships from South Korea

Islamic Republic of Iran Shipping Lines and Iranian Offshore Oil have reached preliminary deals with South Korean shipyards for orders valued at roughly $US2.4 billion ($3.23bn).

The agreements are part of Iran’s efforts to make a comeback in global shipping after the lifting of international sanctions earlier this year, but completing the orders will depend on financing that the Iranians haven’t yet secured, sources said.

“The yards are making slots available to the Iranians starting in 2018 and 2019,” a source said.

“The Iranians are trying to make the 20 per cent downpayments through oil state-to-state deals to finalise the orders.”

If the oil deals work out with the South Korean government, Seoul can then give the necessary guarantees for the downpayment to the yards.

Another source said other options for downpayments are being discussed and that he expects the orders to be completed by the end of the summer.

Islamic Republic of Iran Shipping Lines, known as IRISL, operates a fleet of container vessels, bulk carriers and tankers.

It has signed a memorandum of understanding with Hyundai Mipo Dockyard, a subsidiary of shipbuilding company Hyundai Heavy Industries Group, for as many as 10 petroleum-product tankers and at least six so-called handy size bulk carriers.

Product tankers cost about $US30 million each and handy size bulk carriers about $US20m apiece.

IRISL also is in talks with Hyundai Heavy for as many as six 14,500-container ships, sources said. China’s Dalian Shipbuilding Industry is in the race for the order as well.

IRISL operates about 115 ocean-going vessels, with a total capacity of 3.3 million deadweight tons. But some of the ships are old, have been declassified — or deemed unsafe to travel — and can’t be insured.

“As they modernise their fleet, the Iranians are chartering vessels from Greek and other owners to move cargo,” a third source said.

“Chartering will continue to be a big part of their operations for at least another three years.”

Iranian Offshore Oil, a subsidiary of state oil giant National Iranian Oil, was in advanced talks for firm orders of at least five jack-up rigs with Daewoo Shipbuilding & Marine Engineering at roughly $US205m each, a source said.

“There is a (memorandum of understanding) in the works with DSME, but IOOC is also looking at other yards,” the source said. “Rig orders are rare these days as oil prices are low and offshore drilling is expensive, so there will be a race among major yards for the order.”

Senior South Korean and Chinese yard officials have visited Tehran in recent months to secure shipping deals, one source said, as international orders are drying up on a glut of tonnage in the water and anaemic global economic growth.

By The Australian Business Review